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Wednesday, November 16, 2011

Jury delivers antitrust blow to Rambus

Memory-chip designer Rambus lost more than 60 per cent of its stock market value after a San Francisco jury rejected its seven-year-old antitrust claim against chipmakers Micron Technology and Hynix Semiconductor.

The verdict knocked Rambus stock down to $7.11, its lowest level in nearly three years, giving it a market capitalisation of less than $2bn.to keep D-Ram with Rambus technology out of the market.

“We do not agree with several rulings that affected how this case was presented to the jury and we are reviewing our options for appeal,” said Rambus chief executive Harold Hughes.

Micron shares jumped 23 per cent on the verdict, which followed a three-month trial. The company said the decision vindicated its position that Rambus had simply lost out in the free market.

“[Micron] might have settled out of court for somewhere in the $300m range,” said Kevin Cassidy, analyst at Thomas Weisel. “This saves them that money.”

Rambus has reached chip licensing deals with other companies, including Samsung, for hundreds of millions of dollars.

Rambus appeared to get an advantage during a price-fixing probe of memory chip makers. That exposed emails showing concern that PC makers might prefer some of Rambus’ technology, and indicated that the chip groups might have agreed to keep their own technology priced low.

A 2001 email from Linda Turner, then an international sales vice president at Micron, said of Hynix’s competing Double Data Rate memory technology, “We want DDR to explode in the marketplace so have actually been requesting Infineon, Samsung and Hynix to lower their DDR pricing to help it become a standard and drive Rambus away completely.”

But in a strong counter-attack, some of the defendant companies accused Rambus of manipulating the process for setting standards in the industry. They said Rambus manouevered to get its own contributions accepted while plotting to patent the designs, suing for high royalties only after they were widely adopted.

The Federal Trade Commission in 2006 ruled that Rambus had engaged in an anticompetitive “hold-up”.

The European Commission launched a similar inquiry, which Rambus only resolved by accepting a cap on the royalties it can charge.